Governor Walz and legislative leaders announced an agreement on the state budget Thursday. Under the deal, the state budget will decrease from $72 billion in the last biennium to approximately $67 billion, cutting $5 billion in spending. The deal also includes termination of public healthcare coverage for undocumented adult immigrants, a potential sunset on unemployment benefits for hourly school workers, changes to the state prison system including the closure of Stillwater Prison, a small reduction to the employer tax under the Paid Family and Medical Leave program.

The agriculture jurisdiction received a budget target increasing spending above the baseline by $9 million in fiscal years 2026-27, and $3 million above the baseline in in fiscal years 2028-29. These numbers effectively split the difference between the original House and Senate agriculture targets.

However, several factors are already threatening the agreement. Democratic lawmakers in the People of Color and Indigenous Caucus protested outside the press conference announcing the budget deal and shortly after held a press conference themselves, signaling their opposition to ending public healthcare coverage for undocumented adults.

Additionally, Senate Minority Leader Mark Johnson (R-East Grand Forks) notably did not sign the budget deal and stated his belief that it needs further work. With a one-vote Democratic majority in the Senate, it is possible that Republican votes will be necessary to pass budget bills. That may necessitate further concessions to Senate Republicans.

Regardless of how everything plays out, the Legislature will need a special session to complete their work. They may pass a portion of budget bills prior to adjournment of the regular session on Monday, but it is very unlikely they will complete all bills on time.

The MFBF public policy team and leadership are keeping track of everything that happens at the Capitol. Throughout the session, we will continue to provide updates and insight into our work on behalf of our members.